Almost a third of Australia's largest companies are paying less than 10¢ in the dollar in corporate tax, according to a report that exposes a gaping hole in government revenues over the past decade.

As Australia prepares to host world leaders at the G20 summit in Brisbane in November, where a global assault on tax avoidance will be a key topic of discussion, the report found 84 per cent of Australia's top 200 stockmarket-listed companies pay less than the 30 per cent company tax rate.

Some companies, including household names like James Hardie, do not contribute a dollar to Australian coffers, it found.

Advertisement

Tax minimisation by large companies far outweighs that of small and medium-sized businesses and has a disproportionately large effect on eroding the tax base.

The 90-page look at the the tax contributions of the S&P/ASX 200 between 2004 and 2013 – the first research of its kind attempted – claims up to $80 billion was foregone by the taxman over that period; a sum of money that could all but wipe out the government's past two budget deficits.

It details the widespread and growing use of subsidiaries in tax havens and so-called "thin capitalisation", where local entities are saddled with huge debts to reduce tax liabilities in Australia.

Almost 60 per cent of the ASX 200 declare subsidiaries in tax havens. For example, global broadcaster 21st Century Fox has 117 and logistics group Toll Holdings 72 in low-tax jurisdictions, including Bermuda, the British Virgin Islands and Singapore.

Nearly a third of companies have an average "effective tax rate" of 10 per cent or less.

Many of the lowest paying companies are real estate investment trusts, which pass some of the tax burden onto investors, the report said.

Before its release on Wednesday, the Corporate Tax Association, which represents much of the ASX 200 on tax issues, dismissed the report, saying "usually there are logical explanations for low effective company tax rates".

But the authors of the report said the scope of their research made it clear that "tax minimisation practices of a minority of very large companies have a significant and disproportionate impact on Australia's corporate tax revenue base".

When asked about the report on Monday, Finance Minister Mathias Cormann said Australia had some of the toughest anti-tax avoidance laws in the world.

"Having said that, obviously we are very conscious of the fact that we need to continue to be vigilant and we're working very hard to build a stronger tax administration and to pursue whatever policy response is required, domestically and internationally, through the G20," he told ABC radio.

Senator Cormann later said he was constrained by what he could say in relation to the individual companies accused of dodging their entire tax obligations.

"I'm very confident that the tax commissioner Chris Jordan will be looking very closely at those reports," he said on Sky.

David O'Byrne, national secretary of the union United Voice, which sponsored the report along with the Tax Justice Network - a group of charities, unions and churches - said "the corporate tax system is broken".

"When 29 per cent of Australia's largest listed companies are paying an effective tax rate of 10 per cent or less, it's clear that the system is broken," he said.

"In the last five years the proportion of total tax revenue from business shrank from 23 per cent to 19 per cent, while the proportion from individuals rose from 37 per cent to 39 per cent. Working people across the country are doing all the heavy-lifting because many of our biggest companies are shirking their responsibilities and it's costing all of us billions of dollars a year."

The Tax Justice Network and United Voice will call for a parliamentary inquiry into the corporate tax take after briefing federal MPs.

But they will face stiff resistance from the corporate world, which points to Australia's place at second on the list of countries for company tax take to GDP ratio. Business leaders complain that foreign competitors pay far less in their home countries even though countries like the US have a higher corporate tax rate, of 35 per cent.

Corporate Tax Association executive director Frank Drenth said: "Financial journalists and some civil society groups don't have a great track record of analysing tax information from published accounts. Financial accounts were never specifically designed to facilitate a detailed analysis of a company's tax performance."

In a detailed response, he listed seven reasons why a company's effective tax rate can fall below 30 per cent, including taxed foreign income not being subject to additional Australian tax, tax offsets for expenditure on research and development, and restructures.

"I completely understand what people mean when they say that companies (especially very large multinationals) should pay their fair share of tax. But as a practical concept that isn't very useful because different people will have different ideas about what someone's fair share of tax actually means," he said.

"The CTA believes there should be a cohesive and clear legal framework that enables all taxpayers, large and small, to be confident that they are complying with their legal obligations. The upcoming white paper on tax reform should present an opportunity for these kinds of issues to be considered."

The report, which was reviewed by tax and accounting lecturer Dr Roman Lanis from the University of Technology Sydney, does not allege illegal tax avoidance by any company – nor does Fairfax Media – but calls for greater transparency and a national debate on the system.

The Organisation for Economic Co-operation and Development this month unveiled plans to tackle profit shifting and tax avoidance by multinational corporations and Australian companies will be forced to provide more transparency to the Australian Tax Office from next year.

The ATO declined to comment.

A spokeswoman for James Hardie said the company's consolidated statement of cash flows showed it had paid $US$495 million. But Michael Kobetsky, an adjunct professor at the Australian National University and fellow of the Taxation Institute of Australia said it was unclear where that tax was paid because James Hardie was domiciled in the Netherlands and had subsidiaries in tax havens, including in Bermuda.

"We know they are not paying tax in Australia because their dividends to shareholders are completely unfranked," Professor Kobetsky said.

A spokeswoman for Sydney Airport said: "We comply with all Australian tax laws and pay taxes including payroll tax, stamp duties, fringe benefits tax, council rates, GST and other levies, as well as collecting GST on behalf of government."

A spokeswoman for Treasurer Joe Hockey said: "Companies should pay tax where they earn the profits and that has been [Mr Hockey's] agenda through G20 negotiations. He will work co-operatively with his global partners for a fair tax regime."

Fairfax Media's estimated tax rate is 25 per cent, according to the report, and it has subsidiaries in Malaysia and Singapore.

Labor assistant treasury spokesman Andrew Leigh said: "This data suggests that if all ASX 200 companies paid the full 30 per cent rate of company tax, the budget would gain around $8.4 billion more revenue a year. That is more than the total savings the government expects to make next year by unfair measures like slashing pensions, bringing in its GP tax and cutting programs for indigenous Australians."